A British astrophysicist who was passed over for the Nobel prize for her discovery of exotic cosmic objects that light up the heavens has won the most lucrative award in modern science.

Dame Jocelyn Bell Burnell, a visiting professor at Oxford University, was chosen by a panel of leading scientists to receive the $3m (£2.3m) special Breakthrough prize in fundamental physics for her landmark work on pulsars and a lifetime of inspiring leadership in the scientific community.

She will be handed the award at a glittering Silicon Valley gala in November where previous winners have mingled, at times rather awkwardly, with celebrities such as Kate Beckinsale, will.i.am, Cameron Diaz and Morgan Freeman.

“I have to admit I was speechless,” Bell Burnell said about hearing she had won. “This had never entered my wildest dreams. I was totally taken aback.”

Bell Burnell was born in Lurgan, Northern Ireland, in 1943, and after spells in York and Glasgow arrived in Cambridge “rather by accident” to pursue a PhD at the university’s Cavendish laboratory. While poring over literally miles of data from a new radio telescope she helped to build, she spotted a faint and unusual signal: repeating pulses of radio waves.

“It was a very, very small signal. It occupied about one part in 100,000 of the three miles of chart data that I had,” Bell Burnell said. “I noticed it because I was being really careful, really thorough, because of impostor syndrome.”

Impostor syndrome strikes when people doubt their own achievements and develop a deep sense that they will be outed as a fraud. In Bell Burnell’s case the condition manifested as a fear she would be thrown out of Cambridge: “I’m a bit of a fighter, so I decided that until they threw me out I would work my very hardest. Then, when the time came, I wouldn’t have a guilty conscience. I’d know I had done my best.”

In the hope of capturing a better signal, Bell Burnell went back to the observatory and took more data from the same region of sky that the radio waves had come from. To her dismay the signal had disappeared. Then, after a month of patient observations, the signal sprang to life once more.

Jocelyn Bell Burnell at 31, at her home in Horsham. Photograph: PA Archive/PA Images

With the fresh signals in hand, Bell Burnell phoned her PhD supervisor, Antony Hewish. “He said, ‘That settles it, it’s manmade, it’s artificial radio interference.’” In the mid-60s, radio telescope observations were plagued with interference from passing cars, pirate radio stations and even arc welding equipment. “I couldn’t marshall the arguments fast enough, but I knew that it wasn’t interference,” said Bell Burnell.

She was right. The radio waves were coming from a source that moved across the sky at the same speed as the stars, meaning that, like them, it appeared in the same position at a time that advanced by four minutes each day. That, and other quirks of the signal, ruled out a source on Earth. “It had to be something among the stars,” she said.

Having also ruled out broadcasts from “little green men”, Bell Burnell gathered more observations until eventually she found three more repeating pulses of radio waves emanating from different spots in the galaxy. At the time, the researchers were unsure what produced the signals. Today they are known as pulsars: spinning neutron stars that can be tens of miles across and yet weigh more than the sun. As pulsars spin, they release intense beams of radio waves that sweep around the heavens like beams from a cosmic lighthouse.

The discovery was so dramatic it was awarded the Nobel prize in 1974. But while Hewish was named as a winner, Bell Burnell was not. The decision drew vocal criticism from the British astronomer Sir Fred Hoyle, but Bell Burnell has not complained.

“I feel I’ve done very well out of not getting a Nobel prize,” she said. “If you get a Nobel prize you have this fantastic week and then nobody gives you anything else. If you don’t get a Nobel prize you get everything that moves. Almost every year there’s been some sort of party because I’ve got another award. That’s much more fun.”

The special Breakthrough prize in fundamental physics is backed by Silicon Valley moguls including Mark Zuckerberg of Facebook and Yuri Milner, a former physicist who became a billionaire from investments in tech firms. The prize has previously been awarded to Stephen Hawking, researchers at Cern who discovered the Higgs boson, and physicists on the Ligo experiment who detected gravitational waves.

Bell Burnell became the first female president of both the Institute of Physics and the Royal Society of Edinburgh, and helped set up the Athena Swan programme, which is widely credited with improving the lives of women in academia. “I believe that is having a big, big effect on the way people are thinking,” she said. “More does need to be done, but things are getting better.”

Given her own experience, Bell Burnell’s decision on how to spend her latest winnings follows a clear logic. The money will be handed to the Institute of Physics to fund PhD studentships for people underrepresented in physics. “A lot of the pulsar story happened because I was a minority person and a PhD student,” she said. “Increasing the diversity in physics could lead to all sorts of good things.”